Broker Check

Client Stories

Real Life Stories from the lives of my clients...

1.  Prominent Physician and His Mature Family

More than ten years ago, a prominent physician and spouse designed a comprehensive charitable estate planning strategy. Proceeds of life insurance were the primary asset for inheritance distribution to their children. Most other assets were to be distributed to charity via a charitable lead trust.

When we met three years ago, we learned they had not reviewed the plan since it was created. As part of the Wealth Control System, we performed a Life Insurance Survival Audit, a Long Term Care Economic Impact Study, and an IRA and Retirement Plan/Distribution Planning Audit.

Among key findings were these:

  • Most assets had not been transferred properly – some not at all – creating potential for higher fees and taxes.
  • The current life insurance policies were variable universal life insurance which had relied on high investment returns as part of their internal funding. Volatility in those internal investments meant that the insurance plans were underfunded and in jeopardy of lapsing without considerable annual premium increases.
  • Personal retirement investments were not integrated to one platform. Multiple advisors were used and fees were high.

We worked with the client's attorneys to ensure that their legal documents were updated to include HIPPA language. The provisions for asset transfers were corrected. Life insurance was consolidated and rewritten to give their plans a guaranteed and finite payment schedule not reliant on investment returns. All investments were consolidated to a single active management firm.

Wealth Control Advisors became the "chief operating organizer" for the client's family wealth planning. We are currently working with the client and spouse to capture their family histories utilizing recorded archival information, written ethical wills and videography. This project will help to memorialize their financial philosophy and personal vision statements.

2. Legacy Planning and Privately Held Business

A privately held business had been in operation for over 70 years. The owner was transitioning the company to his son, who was in his late 40's. As head of sales and marketing, the son was the "heir apparent" to run the business upon the owner's retirement or death.

Wealth Control Advisors performed a Business Impact on Personal and Family Wealth project for the owner. We also recommended performing a Business Valuation Audit, however the owner was sure his company was valued accurately. His estate plan was based on his belief that the company would have plenty of cash flow to take care of his wife and children as well as to grow the business.

As part of our Buy/Sell Funding and Succession Planning analysis, we identified a design flaw in the distribution and succession plan for the company. The existing plan specified that when the owner died, ownership would be divided equally between his wife, son and daughter. The flaw in this plan was that the mother and daughter were not active in any aspect of the business. Leaving majority ownership of a going concern to people uninvolved in its operation can put the business at risk. The owner chose not to adjust his plan.

Shortly after our analysis, the owner died unexpectedly. The son took over management of the company, only to discover that it was not as profitable as he believed and that funds were needed to expand its markets. His mother and sister – now each 1/3 owners – needed income and had no interest in managing the company.

The son was forced to sell the business he "inherited" when he was outvoted by his mother and sister who needed income. Without the additional marketing, the company valuation suffered. An opportunistic buyer purchased the company simply to eliminate a competitor, keeping only the inventory and closing down the business. What his father had built and envisioned for the future was destroyed. On top of that, the son was now unemployed, creating animosity among family members.

A current business valuation could have aided the succession planning. Guided family discussions in advance of the founder's retirement or death could have aided recognition that equal shares may not provide equal benefit. More astute estate planning could have averted this disaster.

3.  I've Got Time

An immensely successful 47-year-old entrepreneur had a multimillion dollar estate, yet he never allocated time to work on his personal legacy, estate and insurance planning. His business opportunities, personal and business real estate, and investments were growing dramatically. He also had a large family that kept him so busy he never worried about the future.

Another client of Wealth Control Advisors convinced the entrepreneur to meet with us, and we prepared estate tax planning and insurance strategies. In spite of repeated efforts, however, we never were able to meet in order to increase his life insurance, which had been his primary objective. He just could not find the time.

About three months later, he had a medical crisis resulting in coronary bypass surgery on five arteries. As a result, he could not buy new life insurance cost effectively. This medical event, however, gave him significant motivation to look at all facets of his financial and estate planning needs and his family's levels of current or future protection.

Wealth Control Advisors has undertaken efforts to insure all members of his family, including life policies with guaranteed future purchase options on his children and large blocks of life insurance on his wife as a substitute plan since he cannot cover or add insurance on his own life. We hosted family meetings to educate the adult children about how the new insurance fits into their personal Charitable and Estate Planning.

This family had the resources to do such planning previously, but did very little. An unexpected medical event changed their views – and restricted their options.

4.  Divorce

A 52-year-old client with a successful dental practice needed our advice about existing life insurance policies. Many years earlier, she had wisely purchased permanent life insurance and the maximum disability income insurance.

This client had been married for many years and had two grown daughters. Unfortunately, her spouse's drinking was out of control. Neither treatments nor anything anyone said changed the behaviors. Finally, our client could stand no more and sought a divorce to protect her girls, her dental practice, and her personal and financial life.

Initially we performed a Divorce Assets Review to help our client and her attorney understand what she had before the start of negotiations with the ex-spouse and his attorney. We verified that all of the policies were in good order. They would survive as long as the current premiums were paid and provide the expected distribution upon death.

We collaborated with our client's other trusted advisors throughout the divorce process. Since our client had a medical issue which precluded purchasing new insurance, we helped her and her attorney understand which policies were preferable to surrender and which would allow the client better financial advantage.

While the client and attorney tried to have stipulations in the divorce decree about how the transferred insurance would be held by the ex-spouse, we worked with the client to transfer the retained insurance into trusts for the benefit of the daughters. We also worked with the client's attorney to update the client's will, health care proxy, and durable powers of attorney as part of re-writing the trusts and will.

The final divorce agreement transferred our recommended life insurance policies to the ex-spouse, with the expectation that this would benefit the ex-spouse later in life. This gave the ex-spouse liberty to choose how to manage the cash value or distribution benefit of the policies, with the stipulation that there would be no additional funds available from our client or the daughters.

Shortly after the divorce was finalized, the ex-spouse elected to cash out the policies. Those funds were quickly exhausted and the ex-spouse tried to pressure both our client and family for additional funds. Because the divorce decree was specific, both the daughters and our client were able to decline the request, and were protected from any additional financial obligations.